1/24/2011 @ 12:15PM

What Obama And America Should Learn From China

There has been much discussion lately of how China survived the financial crisis much more robustly than the United States. Many credit Beijing’s centralized power structure, which Sen. Harry Reid mistakenly (and foolishly) calls a dictatorship under President Hu Jintao. Political scientist Francis Fukuyama recently wrote that China’s command system allows for a fast response to problems while America gets bogged down in partisan turf wars. In a shocking turnaround, Fukuyama even now argues that he was wrong to say democracy is the only path forward. You know Americans are questioning their core values when Fukuyama says that.

It is true that China’s system can quickly push through changes like health care reforms while America’s remains in gridlock. However, America should absolutely not move toward any kind of command structure for short-term gain. In the longterm, the checks and balances of a democracy are needed to prevent tyrants from rising and to ensure creative thought. Yes, President Hu is focused on improving human rights and has the support of the Chinese people, but who is to say that will remain the case in five decades under other leaders?

No, the American way is not in definite decline, nor should China’s rise be seen as a threat to our core values. Any political system must be viewed in the context of decades, not mere months. However, there are definite lessons in governance that President Obama and the U.S. can learn from President Hu and China to help get America’s mojo back.

First, although China’s leaders are not elected democratically, they are (contrary to what many Americans believe) very attuned to public opinion. When trouble brews, they issue statements and new laws quickly. Skeptics say they do this because they fear being overthrown and executed, like former Romanian dictator Nicolae Ceausescu, rather than from true humanitarianism. Whatever their motivations, China’s leaders do in fact for the most part listen to the will of the people. Of course, they can’t always fix problems immediately, but they do show that they care about the wants of ordinary folks.

For example, our research suggests that two of the greatest concerns of ordinary Chinese are rising real estate prices and food costs. Leaders show they are addressing these worries by regularly announcing how much square footage of new low-income housing is about to come onto the market or is under construction, and they use taxation to force real estate developers through to product affordable units. Likewise they put price controls on food for low income families, or exempt farmers from road tolls.

America’s political system, on the other hand, is increasingly beholden not to the wants of the majority but to minority special interest groups that hijack the national discourse. Take for instance our absurd gun laws. Our elected officials are so scared about the power of the National Rifle Association that no one is willing to take it on and do what most Americans want–limit the proliferation of weapons like the one Jared Loughner used in Tuscon. Somehow we can regulate how high shrubs should be or how often someone needs to shovel snow in front of a building, but not how safe our streets should be, because of the outsized power of a minority.

Similarly, Wall Street needs a major overhaul along the lines of the Glass-Steagall Act of 1932 to avoid excess risk and leverage in the system. Most Americans know that the problems we face started with behavior on Wall Street, yet our officials are unwilling to go against the deep pockets of executives from
Goldman Sachs
and
JPMorgan Chase
to make the changes that are needed. They want election dollars, and they don’t want to risk losing out on a lucrative post-government career, like former Obama advisor Peter Orszag’s with
Citigroup
or Dick Cheney’s with
Halliburton
.

Obama and our political elite need to learn from China to start representing the needs of the majority, not of the shrillest commentators on Fox News or the deep pocketed few. Until then we will have not a true democracy, but a system that is stacked against the majority.

Finally, President Hu has repeatedly said that no country should be worried about China’s rising power, despite its increased investment in its military. He has focused on creating goodwill with soft power while investing in the military to create economic growth and jobs. He came to the U.S. and signed $45 billion worth of contracts with companies like
Boeing
, and he visited Chicago because of its public school program to teach thousands of students Mandarin Chinese. China is giving the children of African leaders scholarships to study in China, much as the British co-opted local elite in the colonial period by getting their kids to study at Eton and Oxford.

In contrast, America’s rhetoric concerning the Korean peninsula and South China Sea is getting more heated, and its military spending is going up rather than down, despite its limited economic benefit for the country. China’s military spending goes right back into the economy, while ours goes largely to corrupt officials in Pakistan, Afghanistan and other dubious regimes. America is spending 10 times more than China on its military, and that doesn’t even include the costs of running our ongoing wars in different countries.

Aware of how America is willing to use military power in Afghanistan or Iraq, other nations bend to its will not because they are aligned ideologically but because they fear being attacked. That is no way to create long-term allies. Soft power backed by strong military capability, as the Chinese are pursuing, is the better approach, both economically and humanistically.

In today’s difficult economic situation, we are right to question our core values. However, reports of America’s inevitable decline greatly exaggerate the problems we face. By its nature the American system will run into bumps, and sometimes serious ones. Yet if the U.S. continues to evolve and can learn from some of the successes and failures of China’s growth, the nation will be sure to increase its strength and continue to be a beacon for oppressed peoples.

Shaun Rein is the founder and managing director of the China Market Research Group, a strategic market intelligence firm. He writes for Forbes on leadership, marketing and China. Follow him on Twitter at @shaunrein.